An aqueous coating composition is generally inferior to a solvent type composition in durability and water resistance of the formed coating and since it is unable to get a composition with a higher non-volatile content, application characteristics are rather poor. Even if an amount of water insoluble resin powders are compounded with an aqueous resin for the purpose of increasing the non-volatile content of the coating composition, viscosity of the compounded system is inevitably increased therewith and hence, a practical coating composition cannot be obtained. The inventors had formerly found that by the selective use of a particular water soluble resin which will fulfil the requirements that the water tolerance, expressed in terms of water dilution multiplicand of the resin for the solution incapable of reading out the defined type in the test wherein 5 g of aqueous varnish having a common viscosity usually employed in the manufacture of a coating composition are correctly weighed in a 100 ml beaker, diluted with an increasing amount of deionized water and a No. 1 type (26 point type) is read through the said beaker, is 4 or more, and the surface tension calculated for a 1% w/w aqueous solution is 51 dyne/cm or less, it is possible to formulate an aqueous coating composition comprising said water soluble resin and water insoluble resin powders uniformly dispersed therein with a wider solid weight ratio of 98:2 to 45:55 and without the fear of undesired increase in viscosity of the system, and it is thus able to increase the resinous content of a coating composition and have the composition with excellent application characteristics, as well as the improved dispersion stability and film properties. On the basis of these findings, a patent application was filed, which is now publicly opened as Japanese Patent Application Kokai No. 15567/83. The resinous powders used in that invention were prepared by pulverizing a solidified resin and shieving the same, and ever since various techinique have been developed to obtain the better quality powders to be compounded with a water soluble resin. In facts, certain improvements have been attained with these products in respect of application characteristics and storage stability of the coating composition and film properties including gloss and smoothness of the formed coating. However, in most of the heretofore proposed processes, the water insoluble resin powders were advantageously prepared by an emulsion polymerization of .alpha., .beta.-ethylenically unsaturated monomer(s) in an aqueous medium containing a surfactant or emulsifier and in the presence of a polymerization initiator, and therefore, it was unavoidable that the surfactant used was always remained on the surfaces of the formed particles, giving undesired effect on the film properties and especially on water resistance of the film and that when a water soluble radical initiator was selected, said initiator was likewise remained at the end portions of the polymer chain, giving undesired effect on film properties, too. Thus, an additional improvement has still been longed for. Moreover, with an increasing demand for high-grade articles, an aqueous type, top-coat composition capable of resulting a coating with far improved gloss and smoothness has been required, especially in an automobile and an electric appliance industries. It is, therefore, an object of the invention to provide a high quality, aqueous coating composition which is excellent in storage stability and application characteristics and capable of resulting a coating with excellent film properties including water resistance and the like and having far improved gloss and smoothness and which is specifically useful as a top coat for automobile bodies and other articles.